Contrast between Growth-Mediated Economy and Support-Led Model of Economic Development

Contrast between Growth-Mediated Economy and Support-Led Model of Economic Development

Development

Introduction

Healthcare depends on an individual’s and nation’s income and human capital investment. The impact of an increase in income is most impactful in developing economies, where there are income-related health shortcomings. Even a one percent increase in per capita income in these countries will significantly contribute to corresponding healthcare targets such as a decrease in infant mortality rates. A country’s per capita increase also leads to increased spending on public and private goods that directly or indirectly contribute to health improvement. To that end, two economic-led processes positively contribute to improving healthcare: the support-led and the growth-mediated processes. The growth-mediated process describes overall economic growth supported by high employment levels and increased health education and social security investment. On the other hand, a support-led program is a holistic approach emphasizing human capital improvement through social support for healthcare, education, and other relevant social arrangements.

Growth-Meditated Economy

Economic growth’s immediate impact is an increase in the number of people who get employment. Overall, the fast economic growth globally over the past 10 years has been directly linked to an increase in the number of jobs created. Developing and developed countries exhibit different outcomes in job creation due to economic growth (Biswas, 2002). On the one hand, economic growth in the developed world results in the creation of new formal jobs, which are considered economically viable since they promise permanency and higher income. On the other hand, economic growth in developing economies is linked with the creation of informal jobs, particularly in the freelancing space. Whatever the case, economic growth ensures that a significant number of working-age individuals get jobs and are left with disposable income to spend on healthcare.

Whereas economic growth is not limited to materialism, there is a direct link between economic growth and human development. Economic growth means people can afford the freedoms they value. Since economic growth means more disposable income for households, individuals with a higher income can afford better living standards, which include eating better, exercising, and living in human-friendly residences (WHO, 1999). Also, economic development generates a circle of opportunities and prosperity for future generations. With increased disposable household income, parents can afford to educate their children, who will improve societal governance in the future. Such children will become entrepreneurs and work to achieve greater human development in the future.

Additionally, there is a positive link between educated individuals and health awareness. For instance, with proper education, individuals understand what healthcare insurance policies they can purchase. Other positive health habits, like exercising and eating a balanced diet, are likely if the population is well-educated. Essentially, economic growth affords people the knowledge and financial endowment to afford the basic necessities of life and embrace healthy lifestyles, two critical factors to human development.

The correlation between economic growth and human development also operates on the macroeconomic level. For a government to continue providing basic public services for the poor, there is a need for a strong tax base (OECD, 2008). Economic aid from the developed economies helps, but tax is the most sustainable way for developing countries to spend more on public goods. Increased economic growth translates into increased public spending, which means the government can collect more taxes and spend more on improving the state of healthcare. A good example of where increased tax collection has come in handy touches on cancer treatment. Most cancer patients in the developing world have traditionally sought medical care from advanced economies such as India since local hospitals lack the necessary equipment to offer sufficient healthcare interventions. However, recent statistics show that developing countries are increasingly investing in healthcare using resources acquired from taxes, and they are becoming self-sufficient in providing healthcare interventions for their people.

The second link between economic growth and human development is on the microeconomic level. Growth generally raises household incomes for poor people, thus improving their capacity to pay for healthcare and other basic human needs. A good example to assess the contribution of increased household incomes is Vietnam. The country achieved increased growth between 1993 and 1998 at six per cent per annum (OECD, 2008). Consequently, the people were empowered and started demanding more education, not just basic education but advanced education. With increased education access came a higher demand for job opportunities, which were automatically created by the advanced education levels. The growth of the economy also works in the opposite direction, whereby increased investment in education and healthcare holds the potential to enhance future growth (OECD, 2008). In the long run, economic growth is key to creating a virtuous circle of growth and development.

 Support-led Model

Unlike growth-mediated economic growth, which focuses on enhancing the income levels of households, the support-led model is largely concerned with prioritizing social welfare for the most vulnerable segments of the population. The model is largely visible in the education and healthcare sectors of the economy. This model largely assumes that even if economic growth were to occur, the most vulnerable population segments might still fail to access the benefits that accompany such growth. As a result, the government implements direct incentives that target public facilities most frequented by this population segment.

The government intervenes through direct cash transfers to support the most vulnerable members of society. Direct cash transfers are secured electronic and predictable money transfers directed toward some of the most vulnerable households (Baird et al., 2018). These programs do not target to eliminate poverty, but they will go in handy towards helping people who are in dire need of help survive in the short run (Baird et al., 2018). To that end, some of the most popular cash transfer programs include conditional cash transfers, unconditional cash transfers, and cash plus programs. Unconditional cash transfers are offered with no attached conditions; hence beneficiaries are at liberty to spend them as they wish, while conditional cash transfers are attached with specific end goals, such as healthcare payment or educational attainment. Finally, the cash plus programs are fairly new interventions designed for specific goals such as nutritional improvement and are directly paid to the provider.

Also, the support-led program manifests through non-market interventions such as public works programs. The programs are provided either through the state or other agencies, but the end goal is to ensure the vulnerable population segment has something to take home by the end of the day (Subbarao, 2003). These programs aim to provide employment and create physical and social assets in exchange for a wage. The public employment programs help the targeted population embrace healthy eating habits besides financing their healthcare needs. Such programs are most common in the developing world, where there are high inequality levels.

Additionally, the government may intervene through subsidy programs that target specific goods. The economic impact of subsidies is to increase the buying behaviour of the masses by reducing the overall pricing of essential goods and services. Although these subsidies may be regressive since the rich take advantage and capture some benefits, they are essential in alleviating poverty and helping the poor population segments keep going. In healthcare, social security interventions include government-sponsored resource pooling to enable a margin of the contributors to access healthcare that would otherwise be unattainable.

Conclusion

Support-led and growth-mediated economic development models are designed to enable households to improve their income and overall welfare. On the one hand, growth-mediated development seeks to increase public spending by increasing per capita income. By empowering the masses through improved education and job creation, the beneficiaries will have more to spend on human development. The growth-mediated programs also increase public spending, which means the government can collect more taxes and direct them toward funding public programs such as healthcare. On the other hand, support-led programs target the most vulnerable population segments without necessarily increasing per capita income. Some support-led programs are common in non-market labour programs and social-security interventions. By offering targeted benefits, the beneficiaries can access facilities that they would not ordinarily afford in their current economic statuses. Both programs lead to a virtuous circle of opportunity and prosperity since the empowered population segments spend the accruing incomes in their economy.

References

Baird, S., McKenzie, D., & Özler, B. (2018). The effects of cash transfers on adult labour market outcomes. IZA Journal of Development and Migration, 8(1). https://doi.org/10.1186/s40176-018-0131-9

Biswas, B. (2002). The Effects of Economic Growth and Public Support of Health The Effects of Economic Growth and Public Support of Health Services on Longevity–A Panel Data Analysis Services on Longevity–A Panel Data Analysis. https://digitalcommons.usu.edu/cgi/viewcontent.cgi?article=1242&context=eri

OECD. (2008). Economic growth: the impact on poverty reduction, inequality, human development, and jobs. https://www.oecd.org/derec/unitedkingdom/40700982.pdf

Subbarao, K. (2003). Systemic shocks and social protection: role and effectiveness of public works programs. Washington, DC: Social Protection, World Bank.

WHO. (1999). Health in development. https://apps.who.int/gb/ebwha/pdf_files/WHA52/

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

Topic: Economic Development Paper

Prepare a 5-page paper to compare and contrast growth-mediated economy and support-led model of economic development.

Contrast between Growth-Mediated Economy and Support-Led Model of Economic Development

How do each of these models affect population health?